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CATA News

  • Saturday, March 19, 2022 4:07 PM | Anonymous
    Auto dealerships that need to hire good service technicians don’t need to go far to find them, according to Mike Coley, president of ASE Education Foundation. Their future employees are right down the street.
     
    "We need more technicians in the industry, but where are we going to get them? What we want to promote is there are high schools [and] colleges in your community that you could be partnering with," Coley said.
    To help dealers tap into those community resources, the ASE Education Foundation has created an "Adopt A School" toolkit that outlines the different activities that dealerships can take to connect and engage with schools and students. 
    Some of those activities include becoming part of the school’s advisory committee, participating in a local school’s Career Day and instituting a work-shadow program at a dealership.
    NADA Foundation Chairwoman Annette Sykora said she makes sure her dealership is an active partner with her local high schools and community colleges. 
    "All of the dealers in our community, we put together a wish list, a new program, new equipment, new lifts at our local community college. And guess what? The program is overflowing with students," she said.
    The goal of the free adopt-a-school toolkit is to extend dealership participation and engagement across the country, Coley said.
    "We work with 2,300 different high school and college programs and impact over 120,000 students every year. Our reach is large, but we have a national problem, with a local solution.
     
    "Unless you show up at the school and get involved, students won’t know what great [career] opportunities we have," Coley said.
     


  • Saturday, March 19, 2022 4:07 PM | Anonymous
    There has been a lot of conversation the past few years surrounding new-car inventory and prices. What key things can dealers do to stay ahead in 2022’s next three quarters? 
    Brian Finkelmeyer, the senior director of new-vehicle solutions at Cox Automotive, said the automotive industry is in a circular pattern of low new-car inventory and high consumer demand. Many dealers are still running with single-digit day supplies, and the recent U.S.-Candian border protests slowed things down further. 
    On the demand side, Finkelymeyer said there has been a little softening of consumer sentiment that likely is caused by the global economic hardships surrounding Russia’s invasion of Ukraine.
    Consumers still seem to be more than willing to pay full sticker price, or close to it, for new vehicles. In fact, data show that pre-pandemic, 75% of new-car buyers paid below MSRP for their vehicles. Today, 75% are paying exactly the MSRP or above. Despite this, Cox Automotive’s 2021 Car Buyer Journey Study revealed that consumers still are more satisfied with their shopping experiences than they were pre-pandemic.
    Industry experts, including Cox Automotive’s chief economist, Jonathan Smoke, are saying supply conditions will improve but maybe not for at least six to eight more months. Dealers will need to be strategic in order to succeed with their inventories during the spring selling season. 
    Finkelmeyer said dealers should consider three things when it comes to managing inventory right now:
     
    1. Gross profit versus turn. Manufacturers reward dealers who turn and earn the fastest. Button up on any reporting the day before the allocation runs.
     
    2. Be mindful of aging vehicles and inventory updates on dealer websites. On average, 15% of inventory shown on a dealer’s website is 90 days or older.
    3. About 42% of dealers’ used-car inventories come from trade-ins and new-car sales. It is a critical piece of the business that helps generate the overall profitability of a store.
    The EV market still is small, but it is a fierce and feisty segment. In January ’22, about 4.1% of new-vehicle sales were EVs. This will be an exciting year for the industry, said Finkelmeyer. A number of EV launches are taking place, but consumer adoption still is questionable. Many of the launches are full-size EV pickups. Will that be enough to sway the average consumer? Only time will tell.
     


  • Saturday, March 19, 2022 4:07 PM | Anonymous
    Dealerships must be in compliance by Dec. 9, 2022, with a new Gramm-Leach-Bliley (GLB) Safeguards Rule that contains a series of extensive and complicated new data security requirements, the Federal Trade Commission announced recently.
    A series of compliance aids for dealers, including an FAQ document and a well-attended webinar for dealerships, were prepared by the National Automobile Dealers Association. In addition, the NADA this month issued its comprehensive and updated "Driven Guide to the FTC Safeguards Rule," which is available to all NADA members. 
    The guide’s primary author is a former FTC attorney, and it contains extensive guidance on compliance with the new requirements, as well as IT guidance from a professional IT firm. It also includes several appendices containing sample polices and links to governmental and other regulatory guidance on data security. A portion of the appendix material was provided by one of the NADA Affinity program providers. 
    The NADA will continue to provide compliance guidance throughout the year, but in the meantime, dealers are encouraged to review the guide and work closely with their vendors, IT professionals, attorneys, OEM partners, and others to ensure they can fully comply with the new requirements by Dec. 9, 2022. 
     


  • Saturday, March 19, 2022 4:07 PM | Anonymous
    In collaboration with the Center for Sustainable Energy and Plug In America, the National Automobile Dealers Association on March 11 announced a new nationwide program to greatly enhance electric vehicle education at franchised dealerships. The dealership program developed through this partnership is supported by the Alliance for Automotive Innovation, which will engage all vehicle manufacturers to further dealership participation across the U.S.
    While automakers continue to bring more EVs to market, providing future EV buyers with the information and expertise to get them comfortable and confident with their first EV purchase is far more crucial to mass-market adoption and fleet turnover than just product alone. Franchised new-car and -truck dealerships are the key as consumers depend upon dealership sales and support staff to educate them on the current and forthcoming EV models, charging options, EV infrastructure, service requirements and the additional facets related to EV ownership.
    "By bringing these two EV-focused powerhouse organizations together with the NADA, we will efficiently educate dealers and help accelerate the mass market adoption of electric vehicles in the U.S.," said Mike Stanton, the NADA president and CEO. "The dealership training program leverages the strengths of each organization and will ensure dealers are more than prepared to sell and service the EV future."
    The online, interactive program will be designed to complement OEM model-specific training and will serve as a brand-agnostic review of essential content that dealership sales staff need to be able to communicate with customers to efficiently close EV sales. The program offers quick, easily digestible talking points that allow sales staff to confidently encourage potential EV buyers, and includes short modules to appeal to different learning styles.
    "The electric vehicle market is moving beyond early adopters to consumers who have lots of questions about what it’s like to own an EV," said CSE President Lawrence Goldenhersh. "Auto dealer sales staff sit at the nexus in this market transition, and will be called upon to provide confidence-creating, point-of-sale education to millions of auto buyers considering the move to an EV. We are honored to be working with NADA to provide the training that will empower these sales teams to be a trusted resource to the auto buyers they serve."
    Joel Levin, executive director of Plug In America, said: "The transition to electric vehicles is now inevitable and dealers play an important role in helping consumers as they make the switch. "We are excited to work with the NADA and the CSE to help dealers educate consumers about the many benefits of EVs, from cleaner air to convenience to the great driving experience."
    As a result of successfully completing the course, dealership sales staff will receive a program certification that documents their full understanding of and proficiency in various core competencies. Additionally, successful program participants will also receive Plug In America’s PlugStar certification. Sales staff who earn a certification will be eligible to participate in the all-new Dealer Referral Network, a consumer resource for identifying dealerships with staff trained and certified in EV sales.
    "The auto industry is undergoing a significant transformation, and preparing the workforce will be key as new electric vehicle technologies come to market," said Alliance for Automotive Innovation president and CEO John Bozzella. "We look forward to working with our dealer partners on this program."
     


  • Saturday, March 19, 2022 4:07 PM | Anonymous
    Vehicle thefts at area new-car dealerships continue, with methods that are increasingly brazen. Attend a CATA seminar on March 29 for a review of what to do to prevent thefts and what to do if your dealership is stricken.
    Despite the increasing sophistication of automotive technology — some even say because of it — thieves continue to find ways to help themselves to vehicles. Modern thieves use both low-tech and high-tech methods.
    It is important that dealerships have action plans in place if vehicles or even keys are stolen. For instance, it is important to know which police agencies to notify following a theft, and in which order. Also, records from test drives should be maintained, as thieves often visit dealerships before stealing from them. It also is important not to approach thieves in action, as they usually are armed.
    Thieves are smart, but that doesn’t mean they can’t be outsmarted. By staying vigilant and taking precautions, dealerships can be made less attractive targets.
    The discussion will be led by officials from law enforcement, from a private security service which counts area dealerships as clients, and from an automotive group in the Chicago market.
     
    Speakers
    • Karianne Thomas, security director for Zeigler Automotive Group 
    • Joshua Mailey, president of Signal 88 Security
    • Roe Conn, a member of the Cook County Sheriff’s Office working on a crime analytics team specializing in vehicular hijacking and roadway shootings
    • Representatives from the Illinois Secretary of State Police’s Statewide Auto Theft Task Force
     
    The free, in-person presentation begins at 9:30 a.m. March 29. To reserve a seat, email dealermail@cata.info with employee names and positions.
     


  • Friday, March 04, 2022 4:11 PM | Anonymous
    As Mitsubishi Motors marked 40 years in the U.S., the company noted its longest franchisees, including Biggers Mitsubishi in Elgin (32 years) and Coronet Mitsubishi in Ottawa (30 years). 
     


  • Friday, March 04, 2022 4:11 PM | Anonymous
    To address the aging technician workforce, the Hoffman Estates-based Collision Repair Education Foundation (CREF) has organized a "can’t miss" career fair event, 9 a.m.-1 p.m. March 11, where dealership managers can meet hundreds of Chicagoland area high school & college auto service/mechanical and collision students from the greater Chicago area.
    The World of Wheels/Auto Rama Student Day will be at the Donald E. Stephens Convention Center in Rosemont. The vast majority of students in attendance at the event will be specialists in mechanical/auto service. As students approach spring graduation, this is a chance for dealers to network with students who could be a dealership’s future entry-level fixed ops workforce. 
    For more information and participation details, contact Tiffany Bulak from CREF at tiffany.bulak@ed-foundation.org.
     


  • Friday, March 04, 2022 4:10 PM | Anonymous
    The Bosak Auto Group, with 13 franchises in northwest Indiana, revved up the pink factor during October 2021 to fuel funding and awareness for breast cancer research. The group’s 14th annual Breast Cancer Awareness Month fundraiser collected $3,355 for the Community Cancer Research Foundation in Munster, Indiana. A donation was made from every car sold during October.
    "We all know someone who has been affected by breast cancer. The fundraiser was organized to benefit local residents and help support our local communities," said Theresa Bosak, the dealer group’s chief marketing officer.
     
    Since 2007, funds from the auto group’s efforts each October benefit the cancer research foundation, a not-for-profit organization dedicated to improving the quality of cancer care in northwest Indiana and the Chicago south suburbs. The foundation links patients with research sponsored by the National Cancer Institute and other major research cooperatives worldwide.
    Community Healthcare System offers patients access to research for prevention and/or treatment for every stage of breast cancer, from Stage 0 breast cancer to advanced disease. The foundation also offers patient access to research for the prevention and/or treatment of lung, prostate, skin and colon cancers, lymphoma, adult leukemia and multiple myeloma.
    "These funds will make it possible to connect local residents to clinical research trials from around the globe, close to home in their own neighborhood," said Marie Macke, service line administrator, Oncology Services, Community Healthcare System. "We would like to sincerely thank Greg Bosak, Theresa Bosak, Skip Bosak and the Bosak Auto Group for their generosity and support of the Community Cancer Research Foundation."
    For more information about the foundation, visit www.myccrf.com.
     


  • Friday, March 04, 2022 4:10 PM | Anonymous
    The surge in auto prices in the second half of 2021 has pushed more consumers to take out auto loans that stretch beyond six years, according to a new report analyzing how millions of consumers finance the vehicles they have purchased.  
    Credit monitoring service Experian, which analyzes new- and used-vehicle loans, said more than a third of all new vehicles bought in the fourth quarter were financed with loans that have terms of 6½, seven or even 7½ years.  
    Longer loan terms are one way auto buyers are trying to offset a spike in new- and used-vehicle prices sparked by the low inventory of new cars and trucks.  
    "The uptick (in loan amounts) is not solely attributed to inventory shortages; it’s partly due to consumers simply buying larger vehicles," said Melinda Zabritski, senior director of automotive financial solutions for Experian.
    In the fourth quarter, the average amount financed for a new-vehicle loan jumped $4,300 compared with the same time in 2020, hitting an all-time high of $39,721. While consumers have tried to lower their payments by taking out loans with longer terms, the average monthly payment still increased $65 to a record high of $644.
    The numbers are the latest indication that strong demand and low inventories have combined to drive auto prices much higher. "What I think you are seeing is the general lift from the heavy discounting in 2018 and 2019," AutoNation CEO Mike Manley said after the company reported very strong fourth-quarter earnings. 
    Higher loan amounts and monthly payments are not just limited to new vehicles. Experian said used-vehicle prices and loans climbed to a record high with the average amount borrowed in the fourth quarter reaching $27,291, an increase of 20%. The average monthly loan payment now is a record high $488, according to Experian.
     


  • Friday, March 04, 2022 4:10 PM | Anonymous
    By Patrick Manzi, NADA Chief Economist
     
    Recent media coverage about rising new-vehicle prices fails to account for unprecedented market conditions in the retail auto market. The analysis that follows (which is largely based on J.D. Power PIN data drawn from 42% of all consumer transactions for new vehicles) explains key factors driving vehicle pricing.
    • The widespread microchip shortage has sharply cut vehicle production and reduced dealership inventories to 40-year lows, while consumer demand has remained strong. This supply-and-demand imbalance has created significant upward pressure on new-vehicle prices.
    • These market forces drove the average price paid by consumers up 13% in 2021. Even with such an increase, the average price paid by consumers during 2021 was still below the Manufacturer’s Suggested Retail Price.
    • Market forces simultaneously drove up used-vehicle prices by 41%, which significantly increased trade-in values. These larger trade-in allowances more than offset the increase in new-vehicle prices. In fact, new-vehicle buyers with a trade-in paid an average of $305 less in 2021 than in 2020.
     
    Vehicle production, inventory headwinds
    New-vehicle transaction prices increased throughout the year as the microchip shortage reduced the supply of new vehicles while consumer and fleet demand remained steady.
    Vehicle inventory levels drive manufacturer decisions on incentives such as rebates, promotional financing and other incentives. In particular, manufacturer incentive spending historically rises and falls as inventories rise and fall. With such low inventory and such high demand, the OEMs reduced their incentive spending each month last year, with reductions in available OEM incentives effectively raising prices for consumers. Average incentive spending per unit in 2021 fell from $3,482 in January to $1,516 in December. For the year, incentive spending per unit averaged $2,429, a decrease of 39.7% compared with full-year 2020.
    And the increase in vehicle prices was not limited to the legacy automotive brands. Direct sellers, such as Tesla, also increased their prices in 2021. According to data from Kelly Blue Book, the average transaction price of a Tesla in December 2021 increased by 20.2% year-over-year. While the MSRP of vehicles sold by franchised dealerships have seen only minor increases, the price increases implemented by Tesla are likely to remain permanent.
     
    Despite upward pricing pressure, average new-vehicle prices remained below MSRP in 2021
    Because of the microchip shortage, manufacturers prioritized production of trucks and SUVs, and among those trucks and SUVs they prioritized production of higher trim models, which contributed to the rise in vehicle prices. Many consumers chose to custom order their vehicles directly from the manufacturer, and some have chosen these higher-trim trucks and SUVs as well.
    Because of lower discounting, manufacturer production decisions and consumer preferences, the average transaction price moved closer to MSRP in 2021, increasing by 13% compared with 2020. However, in the aggregate, the average transaction price was still below the average MSRP in 2021.
     
    Trade-in values soar — offsetting new-car price increases
    While the supply of new vehicles tightened, many retail and fleet buyers turned to the used-vehicle market, bidding up wholesale and retail used-vehicle prices. Wholesale auction prices set records throughout the year. According to the J.D. Power Used-Vehicle Price Index, used-vehicle prices rose 41% in 2021.
    Historically, used vehicles depreciate significantly over time, but in the unique supply-constrained market of 2021, used vehicles actually appreciated through the year. As a result, new-vehicle consumers with trade-ins saw average trade-in allowances increase by 33.0% in 2021. Consumers suddenly had 58.5% more equity in their trade-ins that resulted in reduced new-vehicle payments in 2021.
    Indeed, after increasing year over year in both 2019 and 2020, the difference between the average trade-in value and average transaction price in 2021 fell by $305, or 1.5%. This means that the average new-vehicle buyer with a trade-in spent less out-of-pocket on the purchase of a new vehicle in 2021 than they would have in 2019 and 2020.
     
    Conclusion
    Prices increased for new vehicles in 2021 due to reduced production, low dealership inventories, reduced OEM discounting and high demand from retail consumers and fleet buyers.
    The real-world impact on consumers is more complicated. Because used-vehicle prices appreciated at record rates in 2021, new-vehicle buyers with trade-ins were able to more than offset the increased price of their new-vehicle purchase due to higher average trade-in values.
     


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